DICK'S Sporting's Q4 Earnings Beat, Comparable Sales Rise 6.4% Y/Y

DICK'S Sporting Goods, Inc. DKS posted impressive fourth-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While earnings declined year over year, sales improved from the prior year.Adjusted earnings per share (EPS) were $3.62, down 6% from the year-ago figure of $3.85. However, the metric beat the Zacks Consensus Estimate for earnings of $3.49 per share.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar. Despite strong results, DKS’ shares fell more than 5% yesterday. Management has issued a soft comparable sales (comps) view for fiscal 2025. The company expects comps growth of 1-3%, down from 5.2% delivered in fiscal 2024. Earnings also fell year over year in the reported quarter. These factors might have weighed on investors’ sentiments. The company’s shares have lost 10.9% in the past three months compared with the industry’s decline of 14.1%.DKS’ Quarterly Performance: Key Metrics & InsightsNet sales of $3.89 billion improved 0.5% year over year and surpassed the consensus estimate of $3.76 billion. The upside was driven by robust comps and healthy transaction growth. Notably, this marked the largest sales quarter in the company’s history.DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise DICK'S Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICK'S Sporting Goods, Inc. QuoteConsolidated comps grew 6.4% year over year, backed by a 4.4% rise in average ticket and a 2% jump in transactions. Our model estimated comps to grow 1.2%. This reflects almost a 15% three-year comp stack.DKS Records Higher Margins & ExpensesGross profit rose 2.3% year over year to $1.36 billion and surpassed our estimate of $1.27 billion. Meanwhile, the gross margin expanded 39 basis points (bps) year over year to 35%. This growth was primarily led by reduced shipping costs and increased merchandise margin, which was somewhat offset by planned deleveraged occupancy costs owing to the 53rd week of the prior year.The adjusted SG&A expense rate of 24.6% rose 100 bps year over year. Adjusted SG&A expenses, in dollar terms, grew 4.8% to $957.6 million and were higher than our estimate of $906.3 million.DKS’ Financial Health SnapshotDICK’S Sporting ended the fiscal fourth quarter with cash and cash equivalents of $1.7 billion and no outstanding borrowings under the revolving credit facility. It had a total debt of $1.5 billion as of Feb. 1, 2025. Total inventory rose 18% year over year to $3.3 billion.This Zacks Rank #2 (Buy) company repurchased 1.3 million shares under its share repurchase program for $268 million in the 52 weeks ended Feb. 1, 2025. It had $511.5 million remaining under its authorization as of the same date. It paid quarterly dividends of $361.7 million in the fiscal year. The company has also announced a new five-year share buyback program of up to $3 billion.On March 10, 2025, the company's board authorized and announced a quarterly dividend of $1.2125 per share on its common Stock and Class B common Stock. The dividend is payable April 11, 2025, to stockholders of record as of March 28, 2025. The new dividend reflects a raise of 10% over its previous quarterly payout. This marks the 11th straight year of dividend raise.What to Expect From DKS in FY25?Management issued guidance for fiscal 2025. It projects net sales to be in the band of $13.6-$13.9 billion compared with $13.4 billion recorded last fiscal. The company expects comps growth of 1-3%, down from 5.2% delivered in fiscal 2024. The midpoint of the comps view represents almost a 10% three-year comp stack. Management predicts comps to be nearer to the high end of its guidance through the fiscal third quarter. However, in Q4, it will be lapping solid results from 2024.DKS envisions earnings to be $13.80-$14.40 per share compared with adjusted earnings of $14.05 per share posted in fiscal 2024. DICK'S Sporting envisions EPS to drop year over year in the first half while increasing in the second half. The adjusted EPS view assumes 82 million shares outstanding. Also, the company’s effective tax rate is expected to be around 24%.Management forecasts the gross margin to grow year over year, which, at the midpoint, is likely to improve about 75 bps. The gross margin expansion is likely to be offset by deleveraged SG&A. It expects higher deleveraged SG&A costs in the first half with moderation in the second half as the company laps the increased investment levels from the second half of the prior year. Pre-opening expenses are forecast to be $65-$75 million, with roughly one-third incurred in the first half and the remaining to be incurred in the second half of the fiscal year.Both the EBIT and EBIT margins are likely to be nearly 11.1% at the midpoint. At the high end of the forecast, DKS expects EBIT margin expansion of 10 bps on an adjusted basis. Interest expenses are likely to be roughly flat year over year while other income, comprised mainly of interest income, is anticipated to decline on lower interest rate year over year.For 2025, DKS capital-allocation plan has a net capital expenditure of about $1billion, of which a part is a shift from the last year owing to the timing of the spend. The company intends opening nearly 16 more House of Sport locations, bringing the total to nearly 35 by the end of the year. It will also start construction on roughly 20 House of Sport locations, slated to open throughout 2026. For the Field House, it anticipates to open about 18 additional locations for a total of 44 locations by the year’s end. It looks forward to expand the footprint of its Golf Galaxy business and plans to introduce approximately 14 Golf Galaxy performance center locations.More Key PicksWe have highlighted three other top-ranked stocks, namely Boot Barn BOOT, Urban Outfitters URBN and Deckers DECK.Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 14.9% from the year-ago figure. The company delivered a trailing four-quarter earnings surprise of 7.2%, on average.Urban Outfitters, a fashion lifestyle specialty retailer, currently sports a Zacks Rank of 1. URBN delivered an average earnings surprise of 28.4% in the trailing four quarters.The consensus estimate for Urban Outfitters’ current financial-year sales indicates growth of 5.9% from the year-ago figure.Deckers, a footwear and accessories dealer, currently has a Zacks Rank of 2. DECK delivered an average earnings surprise of 36.8% in the trailing four quarters.The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 15.6% from the year-ago figure. 5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks